September 2007
Community Paper
copyright ©2007 by Community Publishing, Inc. All rights reserved.


The Sky Is Falling, the Sky is Falling...
by Mike Derenthal, Derenthal Realty Group and College Park resident

I read several articles from reputable news sources last week about the impending doom that is facing the mortgage industry, and I could have sworn that Chicken Little was a contributing author to just about all of them.

There were some fairly interesting, if not totally confusing, articles discussing how foreclosure rates here in the United States were actually causing banks around the world to shut down and sapping billions of dollars in value from global financial markets.

Well that's all fine and dandy you might think, "but how does that affect me???" Depends on who you are.

If you're Joe Seller here in College Park, put your guard up and carefully consider all aspects of any contracts you accept. Financing contingencies are suddenly a big deal. If your buyer has strong credit, can put down 20% of the purchase price, and finance the other 80%, you're probably in good shape. But keep in mind, this type of buyer has become an oddity in recent years, and the scarcity of this type of buyer is now the next negative pressure we're going to be dealing with here in our market.

If you're Bob Buyer here in College Park, you need to have a heart to heart with your lender. That pre-approval letter she gave you two weeks ago might not be worth the letter-head it was written on at this point. Unless you fit the description of our buyer in the previous paragraph, you may find that your ability to borrow has changed significantly in recent weeks.

Food for thought for Joe Seller and Bob Buyer – don't let the melt down in the mortgage market sink your ship. Keep an open mind about owner financing options. I predict we will see the owner financed deal make a big comeback in the next year.

Finally – what if you're just Harry Homeowner here in College Park? Does all this stuff have an impact on you? Yes. As mentioned, the tightening of credit and added difficulty in obtaining financing for home purchases will be yet one more negative pressure on home values. Whereas the effect of over supply has been extremely localized (and not impacting values here in College Park as badly as other areas) it is possible that a serious credit crunch will have a more pervasive effect on property values across the board.

The good news is, at press time, the market hysteria that lasted two weeks has begun to subside. Chicken Little is still running around out there, but his rants have been pushed to the back page. And as I was telling someone the other day, despite what I read in the papers every day, people are still buying and selling houses. So hang in there Joe, Harry and Bob.

by: Mike Derenthal, Derenthal Realty, www.DerenthalRealty.com
1520 Edgewater Drive, Suite E, Orlando, FL 32804
407-965-1919

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